Wish I could claim credit for this design. I saw it in Family Fun when Glenn was in preschool(or younger maybe). I've made a few of these for little friends. Add a paint set and it's a great birthday gift. So simple really, you just fold up the bottom of a hand towel then sew the sides and in the middle to create a pocket.
To finish it off, fold down the top corners and run a seam about an inch from the fold. This creates a casing for the ribbon. Thread it through and you're done.